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Monday, March 22, 2010

Monday Challenge Project Summary: March 22, 2010

Previous $500 Challenge Project Balances:

"The Three Sisters":

Investing "Sister" Balance: $810.35
Trading "Sister" Balance: $1,690.30
Interest Bearing "Sister" Balance: $375.30
Total Challenge Project Funds: $2,875.95

The original video explanation of the Challenge Project that began with $500, is to be found here. The Challenge Project is basically a demonstration of a model that anyone could at least follow along with on a weekly basis. It is my attempt without cost, to help out the 'little guy' when it comes to investing and trading by providing an example, a 'model' as it were ... as run by myself as a professional trader with real money, in sub-accounts that I own; following my own three sisters portfolio management system; albeit modified a bit to operate with low funds. From time to time, I provide snapshots of the broker statements.

Rule No. 2 of the Challenge Project states that each month, we can divvy up $100.00 as we wish between the various challenge project accounts. Some time ago I stated that I may split up Rule No. 2, into weekly segments; or $25.00 a week.

For this week, the $25.00 weekly deposit is being transferred to the Challenge Project SAVING Account.

We end this quarter with a final addition to the side-pocket "savings sister" account. As you can note below, we have increased this account by 99.87%. Even with accounts at such tiny levels, important lessons are to be learned. This has been all about proper portfolio management.

You have to make decisions based on what's best for the future stability and growth of your portfolios.

Now take just a second, and take a look over the growth curve's of the capital in the graphs for the Challenge Project's "three sister" accounts


Note the difference between the growth of the capital curve between the different accounts?

Now obviously, because the "savings sister" account was so tiny, that the explosion in the growth curve has to do with deposits on top of a tiny account. But really, this explosion has to do, not only with the original size of the account, but focusing on using rule no. 2 towards strengthening this 'foundation' of the 'three sisters'.

And I'll say again, do you note the difference between the growth of the capital curve?

In the last quarter of 2009, the investing "sister" account enjoyed concentration from rule no. two. Thus, the growth curve is greater on the investing sisters for that time period. In this first quarter of 2010, we've focused of firming up the foundation of the challenge project overall, and thus the growth curve of the savings "sister" account has exploded upwards.

And there sits the poor ol' trading "sister". With a non-existent curve, with growth that is as flat as can be.

This is why for the second quarter of 2010, we'll focus on applying rule no. two towards the trading "sister" account. And with that focus shift, will also come trading opportunities, and accelerated growth for the Challenge project.

Here are the new balances for each of the Challenge Project ...

Challenge Project Balances After Rule No. 2 Deposit:

Investing Account Balance: $822.48 ($823.58)
(YTD cash and equity is up +3.00% Return is +1.79% )
  • 5.1665 shares of KO (DRIP on)
  • 3.1014 shares of JNJ (DRIP on)
  • 2 shares of MCD (DRIP is now OFF)
  • Cash: $204.61
  • $1.10 of an MCD dividend was transferred to the trading "sister" account
-$5.10 of this cash I reserve to D.C.A. KO
-$64.00 of this cash I reserve to D.C.A. JNJ
-$84.00 of this cash I reserve to D.C.A. MCD
-This leaves $51.51 cash available
  • Additional $100.00 available from slush fund
Investing Account Balance Since Inception
(Can be Enlarged):

Stock / Futures Trading Balance: $1,691.40
(YTD cash and equity up about 5.89 % Return on Capital is 1.15 %)
  • 2% risk tolerance gives us $33.82 to risk per trade
  • 3% risk tolerance gives us $50.74 to risk per trade
  • Additional $100.00 available from drawdown / slush fund
Trading Account Balance Since Inception:
(Can Be Enlarged)

Savings Balance: $400.30
(YTD cash equity up about 99.87 % Return on Capital is 0 %)
  • $100.00 for a Slush fund / Drawdown Kill Switch fund
  • $200.30 for a Base Savings
  • $100.00 for Emergency Savings
Savings Account Balance Since Inception:
(Can Be Enlarged)

Total $500 Challenge Project Balance: $2,914.18

Total Challenge Account Growth Since Inception:
(Can Be Enlarged)

We'll be back to the Challenge Project next Monday, with an entry responding to the question "What has been accomplished with the Challenge Project?" ...

* * *

Note: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have over 13 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.


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